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Gangster Negotiations

So just to review, the big government tax-and-spending bill—called the “Inflation Reduction Act of 2022”—which is on the brink of passing the Senate would:

  • Fuel inflation and increase taxes during a recession;
  • Add $728 billion in federal spending—about a billion a page for the bill;
  • Beef up the IRS with tens of thousands of new agents going after American taxpayers;
  • Decimate research into new drugs, with 135 fewer new medicines over the life cycle of drug development;
  • Hit cancer patients hardest by drying up investment into new treatments and cures;
  • Lead to government rationing of medicines;
  • Result in a loss of 500,000 high-paying jobs in the pharmaceutical industry;
  • Spend more than $360 billion on green-energy pork;
  • Lead to higher utility costs for Americans;
  • Slam Americans with more than $300 billion in new taxes, with two-thirds of the burden over the next decade falling on middle-income taxpayers, including small businesses;
  • Extend higher Obamacare subsidies, mostly benefitting wealthier families;
  • Lead many workers to lose their higher-quality employer insurance;
  • Increase health spending because new treatments and cures for future patients won’t be created;

Yet a recent poll found that the drug pricing provisions of the Build Back Inflation bill are the most popular parts of the bill.

Misleading messaging

That can only be because respondents were given simplistic descriptions of the bill’s provisions to place “caps on prescription drug price increases” and limit “annual out-of-pocket prescription drug costs for Medicare beneficiaries to $2,000.” 

What the poll didn’t explain is the huge implications for actual patients of the dangerous and extremely damaging bill.  

More than 30 CEOs of the top pharmaceutical companies wrote a letter to Congress yesterday expressing “grave concern” about “the attack on medical innovation and the misleading way [the bill] is being sold to the American public.” 

“We know from experience what happens when governments set the price of medicines: Breakthrough cures start slipping away. In countries with government price controls, patients have access to just half of medicines launched globally since 2012, compared to 85% in the United States.”

Rationing drugs

We did our own research on this last year, in partnership with the Pacific Research Institute, to explain what this means. We explained a hidden but central part of the plan that would mean drugs would be rationed, ultimately by putting a dollar value on people’s lives.

Government agencies in other countries use the formula to decide whether to cover and pay for a particular drug—usually a new drug—and which patients can get it.

Supporters of Senate’s bill cloak this in the disguise of government “negotiating” prescription drug prices for Medicare. 

When they learn the facts, people overwhelmingly reject this change.  “I haven’t heard of this before….I just hope they revise it before it does down a really bad path,” a Pennsylvania senior told us.  

A caregiver from Georgia said: “I think it’s very wrong.  There’s all this money put into the scientific research to create these new drugs to make our lives better when it becomes available. How can we deny that?”

No drug cost or inflation relief

The PhRMA CEOs told Congress “This bill will not provide relief for families struggling with inflation or help the average American patient afford their medicines. It will be remembered as a historic mistake that devastated patients desperate for new cures…And it virtually assures that President Biden’s cancer moonshot never leaves the ground.”

The Senate bill leads to gangster negotiation to extract $322 billion from the industry over 10 years.

“What the bill actually does is give manufacturers non-negotiable ultimatums – accept whatever price the Secretary of Health and Human Services sets, pay a massive excise tax of as much as 95% of a medicine’s sales or remove all of your products from Medicare and Medicaid. That’s not negotiation, it’s government price setting,” the CEOs wrote.

Many sensible proposals have been offered to reduce drug prices for seniors, but they have been ignored.  The worst provisions of the legislation that Speaker Pelosi offered in 2019—H.R. 3—have basically been pasted back into the 725-page climate-tax-spending-subsidy bill with its innovation-killing hatchet on the drug industry.

Many fewer new treatments and cures 

A panel of pharmaceutical investors said in a web seminar on Wednesday, hosted by Incubate, that knowing the federal government was getting into the business of setting prices for prescription drugs would kill innovation. 

University of Chicago economist Tomas Philipson estimates that as many as 135 new drugs will never be invented over the next 20 years—the life cycle of drug development. 

And once the research scientists have lost their jobs because research funds have dried up, the cures they could have created will be lost for good.  Cancer patients will be hardest hit

And Dr. Philipson’s newest study shows that the bill will in fact result in higher health spending because pharma treatments tend to obviate the need for (costlier) surgeries, hospitalizations, etc.  Without the new cures in an open research pipeline, millions of lives will be cut short. 

Dangerous politics

We did our own polling survey, but we explained what the Senate’s plan would mean for real patients: 

“If you learned your Democrat candidate for Congress or Senate supported this proposed Medicare drug pricing plan, would you be more likely or less likely to vote for them for Congress or Senate?”  By 66% to 20%, people said they would be less likely to vote for a candidate that supported such a plan.

So legislators should beware.  The truth will come out.

What’s really going on?

You just have to wonder, what is this really all about? The pharmaceutical industry pulled out all the stops to develop, in Warp Speed time, vaccines and treatments for the Covid pandemic that had shut down most of the world.  And pharmaceutical prices are rising much slower than inflation, at only 2.4% last year.

But Congress sees it as a piggy bank to extract more than $300 billion out of the industry to pay for green energy, regressive subsidies for Obamacare insurance, and other big government socialism programs.  Crazy.

As we said last week, the final word will come from the Senate parliamentarian who must decide whether provisions in the bill conform with the Byrd rule that requires provisions to have a budgetary and not a major policy impact.  Any provisions that violate the rule must be struck. 

It seems pretty straightforward that the bill would have sweeping impacts on policy.  We await her decisions.

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